Navigating Fraud, Privacy and Regulations in the Electronics and Appliances Markets

2018-11-27T19:04:02+00:00November 27th, 2018|Compliance, News|

From Self-Care to Smart Backpacks: This is the second post in a five-part series where we’ll highlight product categories with global demand and the regulations and challenges to keep top of mind.

Twenty-first century consumers are glued to their gadgets, which has both spurred the growth of e-commerce in general and the online purchasing of electronics and appliances. The global consumer electronics market – ranging from laptops and smart TVs to trending tech like smart backpacks with Bluetooth speakers, drones, wireless headphones and AR products – is predicted to surpass $1.5 trillion by 2024. The global home appliances market is also robust, valued at $174 billion in 2017 and projected to surpass $200 billion by the end of 2023. There are big opportunities in these spaces, but pitfalls that range from fraud to evolving regulations. We’ve compiled key factors to keep in mind when establishing an international e-commerce presence for consumer electronics and home appliances.

1. Fraud and security concerns are rising alongside sales.

Criminal activity has increased along with consumer demand for electronic gadgets: according to Signifyd’s E-commerce Fraud Index, total fraud losses for consumer electronics retailers increased almost 10 percent between 2016 and 2017, reaching 8.04 percent in 2017. In addition to credit card fraud, e-commerce electronics retailers are now facing newer scams such as reshipping fraud.

2. Consumers are buying smart, but they’re increasingly concerned about security.

The global smart home market is expected to reach an estimated $107.4 billion by 2023. The global market for smart speakers was valued at $2.68 billion in 2018 and is expected to reach $11.79 billion by 2023According to one estimate there will be 55 billion Internet of Things devices by 2025 worldwide, up from about 9 billion in 2017. While fraud is a major concern for retailers, privacy and security issues regarding IoT technology worry both consumers and vendors. In one recent survey almost 70 percent of consumers in the United States and United Kingdom expressed concern over IoT security. Security breaches in this evolving space could potentially impact future sales of IoT devices, but could also provide major opportunities for businesses selling cybersecurity features to protect IoT devices.  

3. It’s unclear who is liable in the Internet of Things.

All e-commerce merchants should have product liability insurance in place, whether they’re selling bathrobes or backpacks. Global rules vary widely, however: in Hong Kong only children’s toys are subject to product liability laws, while in the United States, the European Union and Australia, product liability laws protect consumers from faulty electronics. But liability is not yet a clear-cut issue in the developing IoT space, where there have been calls for renewed studies into consumer product safety. E-commerce merchants should stay on top of evolving legislation in target markets.  

4. The global connected health & wellness devices market is growing

Despite liability and privacy risks, the global connected health & wellness devices market is growing and expected to reach $612 billion by 2024The number of connected wearable devices worldwide is expected to grow from approximately 325 million in 2016 to over 830 million in 2020, with an estimated device revenue of  $95.3 billion in 2021. One challenge for cross border e-commerce vendors is navigating global regulations regarding digital health tracking devices. In the United States, for example, there are different regulations at the state and federal level, and the situation is even more complex for medical wearables. The European Union passed new legislation regarding medical wearables in 2017; it’s also important to note that EU privacy regulations for data collection of wearable tech are strict. In early 2018 the China Food and Drug Administration (CFDA) announced new regulations for medical and fitness wearables and devices as well.

5. Energy efficiency standards for home appliances vary widely.

The expansion of the global middle class and a warming planet has led to increased demand for air conditioners. A majority of households in the United States, Japan and Korea already have ACs, but there is only one residential unit per 100 people in India, compared with 90 units per 100 people in Japan. A 244 percent increase in global AC units is predicted from 2016 to 2050. Energy efficiency standards and consumer incentives for purchasing energy efficient appliances vary across the globe. As of 2015 more than 40 countries were regulating air conditioners; in the United States there are different product requirements for the North, Southwest and Southeast regions. A nationally approved regulatory body, such as Energy Star in the United States, must certify a product’s energy efficiency, although environmental regulations are subject to politically motivated change.

A growing global middle class and continuing demand for consumer electronics, appliances and the latest gadgets means promising opportunities for cross-border e-commerce. But when evaluating different products and markets it’s important to consider how challenges ranging from financial fraud to rapidly changing regulations might impact sales in these global markets.

Working with a technology partner to harmonize your product catalogue and help you navigate these complexities is key.  Looking to launch cross border selling for your business? Contact us today, or check out our International E-Commerce Kit for handy information to help you plan your global commerce strategy today.

Written by
Juliana Pereira is Vice President, Marketing at Flow Commerce. With 15 years experience in marketing and ecommerce, Juliana joined the Flow team after serving as Vice President of Marketing at Smartling. Previously Juliana worked across a variety of verticals and industries, from non-profits and publishing to tech and fashion, including management positions and key contributing roles at Ralph Lauren, The Met Store online (at The Metropolitan Museum of Art), Ziff Davis, and eMusic.